Question

Natalie just rented an apartment for $900 a month. She was told the rent will increase 5.5 %each year. About how much will her rent be in 7 years?

Answer 1

The rent of the apartment per month = $900.

Each year the rent will increase at a rate of 5.5%.

We have to find what will be the rent after 7 years. To find that we will use compound interest formula here.

The formula is $A = P(1+r)^t$

Where, A is the last amount including interest, P = principal amount, r = rate of interest, t = number of years.

Here, P = $900, r = 5.5% = $\frac{5.5}{100}$= 0.055, t = 7

By substituting the values in the formula we will get,

$A = 900(1+0.055)^7$

$A = 900(1.055)^7$

$A = 1309.2$ (Approximately taken upto nearest tenth)

We have got the required answer.

After 7 years the rent will be $1309.2.

Answer 2

Each year the rent is multiplied by (1+0.055), so in 7 years, Natalie's rent will be
.. $900*1.055^7 = $1309.21